The John McCain Market Selloff 32 comments
an article to
-
Font Size:
-
Print
- TweetThis
Ever since the Primary on Tuesday, the markets have aggressively sold off. This clearly indicates the equity market's fear of a McCain presidency.
As the charts below show, ever since Tuesday -- when McCain's Intrade price soared -- stocks have been under continual pressure.
Had Barrack Obama knocked out Hillary Clinton, a mano-a-mano contest would have taken place. A well rested, fully funded Democratic nominee would have been a very tough opponent for the aging Arizona Senator.
However, the Democratic nomination now looks certain to go on for much much longer. It is highly likely to:
-Physically and emotionally wear down the two Democratic candidates;
-Force them to consume much of their war chest;
-Lead the electorate to become tired of the rhetoric, and disenchanted with both candidates;
-Prevent the candidates from spending time doing much opposition research on McCain.
All of this works to McCain's favor. He can therefore rest, save his campaign war chest, maintain media presence (but not to the point of over-exposure). All these positives show up at InTrade (see charts below), where McCain's bettors have upped the ante, sending his futures skyward.
And, the stock market has sold off, therefore proving that McCain must be bad for stocks and for the economy.
John McCain Futures Rally
The John McCain Market Selloff
~~~
Of course, I don't believe a word of that. But you would be surprised as to how many otherwise intelligent people spew variations of this sort of nonsense every day.
I will unequivocally state that anytime you hear this sort of nonsense, you can rest assured that the speaker is a) an unabashed partisan; 2) relatively clueless about how markets operate; iii) never worked on a trading desk.
Markets operate not as forecasters, but as discounting mechanisms. Consider what has to be discounted to credibly say this: First, we would need to know who is likely to win the next election, 8 months in the future.
Remember, eight months ago, it was a lock that Rudy Giuliani was the GOP nominee, and Hillary was going to easily capture the Dem nomination. In case you haven't been paying attention, eight months is a lifetime in politics.
The next president gets sworn in on January 20, 2009. They have to put together a series of legislative proposals, then get them passed by Congress, then fund them. Then, they have to begin implementing them. The impact of these would likely be felt sometime around 2010.
Hence, the utter absurdity of the short term market twitches somehow reflecting unknown possible events, and their likely macro impact, several years hence. Ridiculous.
Consider these questions as the more likely stimuli this bloody market is actually responding to -- the nearer term events that are still unfolding today:
-Are we in a recession or not?
-Is the credit problem fixed yet?
-How much worse will housing get?
-Will earnings rebound in the second half of 2008?
-Will the US dollar ever stop falling?
-Are US deficits going to continue to skyrocket?
-How much more will consumers pull back on their spending?
-(Did I mention the housing picture is a disaster?)
-The war in Iraq is God-awful expensive, is there any relief in sight?
-Is Oil going to go to $150?
-Can the wobbly banks regain their footing?
-And how much more will inflation heat up?
The markets have enough data to digest before they even remotely begin to consider who might be president in 2009, and what they might do . . .
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
Top
StockTalkers.-
1
David Fry
-
2
Cliff Wachtel
-
3
Mike Havrilla
-
4
David White
-
5
Hedged In
Top StockTalkers » -
1
Notwithstanding, your article definitely brought out the politics among your readership, as many of the comments above are anything objective.
Your logic scares me. That anyone would publish, read or believe your trash scares me more.
Hilary or McCain are shoe-ins to keep politics as usual.....given their idiotic subservience to ideology uber alles. To me, Obama is a breath of fresh air but can the establishment afford not to destroy his chances...and survive to practice policy as usual. McCain does not need to destroy Obama, the egotistical Clintons' machine will do the job for him.
As I see it, America will get what it deserves in this election, just like it did in the past two cycles. Why did Mr. McCain, a proven war hero, allow a vagabond military-evader like GW, out maneuver him in 2000? Is this the character we want in our next leader? Courage in the face of a challenge to the homeland? I dare say that Mr. McCain might have been able to make a difference in our military response to 9/11 had he been a real patriot and stood up to the Rovian Bush machine WHEN HE SHOULD HAVE. Too late for that now , Senator!
Too bad Michael Bloomberg has chosen not to get into the fray? A Bloomberg-Obama ticket would be a terrific opportunity to reform the USA in my opinion.
Don't forget about Bill Clinton's retroactive tax increase in 1993. It's a given that regardless of who wins the Presidential election, America would be subject to a wave of tax increases. Is it too much a stretch of the imagination to believe that these taxes would be applied retroactively?
Not only that, don't forget about Bill Clinton's fiscal responsibility!
He created a budget SURPLUS and years of prosperity!
If McCain steals the POTUS seat, look forward to budget DEFICITS larger and larger and larger...
A 100 years of war costs $$$$$, people!
My take: It will be the NEXT election in 2012 where we will see real change, because voters confused into thinking a Dem will save them are already have insane. But by that time the country will want another Reagan. So it will take 4-5 years to purge the turds and then another year or two afterwards before we begin see a roaring economy again.
The next President will not have the resources to wage 'boots on the ground engagements'. I expect more or less a global drawdown of troops and military misadventure from the power vacuum. I wasn't alive in 68' but I read history and it appears it is repeating itself. Besides, who would pay for another war? Those Chinese have found new ways to make money and it doesn't include our manipulated fiat currency.
I see America pulling it's weight with allies using advanced predator drones, special opps and B2 support.
I would choose the worst republican (ok go ahead and say it was Bush) over the best Dem candidate anyday of the week. Because survival of the fittest works, it's programmed in our genes but the Dems don't get that. Either Dem will raise capital gains further slaughtering the stock market, then raise taxes on all classes and give it to pot-smoking Nintendo junkies.
At that point I will leave this nation and wait for the inevitable revolution or attack by America's enemies, then join the fray with my hide and resources behind me. Fighting this never ending irresponsible spew of bullcrap in our government is definately like pissing into the wind.
As for who spends more - it doesn't always work they way you'd think, as mentioned by the comments on Clinton vs Bush budgets. Up here in the great white north (yes Socialist Canada) we balanced our budget years ago, and it was the Liberal party that did it, not the Conservatives. When the Conservative were the opposition, they couldn't really complain. Sort of like the old Vulcan saying: "Only Nixon could go to China".
There was a question about what is propping up the Euro vis-a-vis the US Dollar. Two things I can see:
1) The Fed is creating dollars much faster than the ECB is creating Euros. (Look at M2, which has become such an embarrassment to the Fed that they stopped publishing it.)
2) Helicopter Ben, and the idiot that preceded him (Greenspan), have no answer to any economic situation other than to cut interest rates and create more new money to give to the big banks. Leading directly to things like the housing bubble and further erosion of the US Dollar.*
* So to not be all gloom-and-doom, the decline of the dollar is a two-edged sword. We will all experience a decline in our standard of living, as those big plasma TVs you want will go way up in price, as will everything else. On the other hand, trade deficit will decline and relative labor costs will even out. Maybe domestic industry will become fashionable again? Well, not until corporate taxes are eliminated, but that is a separate lesson.